Correlation Between TAL Education and British American
Can any of the company-specific risk be diversified away by investing in both TAL Education and British American at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining TAL Education and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TAL Education Group and British American Tobacco, you can compare the effects of market volatilities on TAL Education and British American and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in TAL Education with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and British American.
Diversification Opportunities for TAL Education and British American
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TAL and British is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and TAL Education is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on TAL Education Group are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of TAL Education i.e., TAL Education and British American go up and down completely randomly.
Pair Corralation between TAL Education and British American
Assuming the 90 days trading horizon TAL Education Group is expected to generate 1.18 times more return on investment than British American. However, TAL Education is 1.18 times more volatile than British American Tobacco. It trades about 0.26 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.04 per unit of risk. If you would invest 598.00 in TAL Education Group on November 4, 2024 and sell it today you would earn a total of 142.00 from holding TAL Education Group or generate 23.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
TAL Education Group vs. British American Tobacco
Performance |
| Timeline |
| TAL Education Group |
| British American Tobacco |
TAL Education and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and British American
The main advantage of trading using opposite TAL Education and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education position performs unexpectedly, British American can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in British American will offset losses from the drop in British American's long position.| TAL Education vs. Palantir Technologies | TAL Education vs. CRISPR Therapeutics AG | TAL Education vs. STMicroelectronics NV | TAL Education vs. METISA Metalrgica Timboense |
| British American vs. Zoom Video Communications | British American vs. Applied Materials, | British American vs. Multilaser Industrial SA | British American vs. Darden Restaurants, |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |